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Is Medical School Worth it Financially?

Many of our best, brightest, and most ambitious students consider becoming doctors. Not too long ago, it would be crazy to question the choice. Yet a rising number of issues such as malpractice lawsuits, massive student debt, opportunity costs, and a changing medical landscape have made some question the worth of attending medical school. While most types of doctors trump opportunity costs within the decade in which they leave training, the opportunity costs of attending medical school are still massive; and for those who don’t truly want to practice, stress and debt can leave them wondering why they ever enrolled in the first place.

The Economics of Medical School

While the cost of medical school in and of itself is certainly high, the true cost of becoming a doctor is in years and years of your life. According to the Bureau of Labor Statistics, the average weekly earning of a bachelor degree holding American is $1,102. Extended out over a year, this is $57,304 that would-be doctors are missing out on (on average) for at least their first four years of medical school. Multiply the average lost earnings by four, and you end up with $229,216. This may not seem like a great deal when compared to the eventual salaries of doctors, but we haven’t factored in the other costs of the first four years of medical school yet.

The median four-year cost of medical school (including expenses and books) was $278,455 for private schools, and $207,866 for public schools in 2013 according to the Association of American Medical Colleges. While grants and scholarships account for some of this total, lowering eventual debt to an average of $170,000–interest accrues while doctors are still completing their residencies, sometimes adding as much as 25% to the total debt load. Added to the lost potential income above, and assuming a modest 10% increase in debt burden through interest during school, doctors are routinely $416,216 more in the hole when compared to the average college graduate. In other words, comparing doctors to average college graduates, doctors are half a million dollars behind in real and potential losses, all by their early thirties.

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One thing it’s important to remember is that doctors are often some of the best, brightest, and most driven around. This often increases opportunity costs even more than our previously stated numbers. While the median salary of all bachelor’s-degree-only graduates evens out to around $25 an hour, those with the capacity to excel at medical school are probably prepared to excel more than others in the workplace. Given a modest increase to $30 an hour, lets take a look at the true cost of medical school by total hours spent.

With no fellowship and the shortest possible residency of three years, medical school graduates have already spent approximately 27,000 hours on their medical training. This is assuming 80 hours a week of studying and training, for 48 weeks a year in medical school, and 80 hours a week of studying and work, for 50 weeks a year during residencies. This may seem like a lot, but Medical school is hard and requires many more hours than most people work, particularly once long residency shifts are included. To put the amount of time many students are spending on medical school in perspective, working 40 hour work weeks, it would take another worker almost 13 years of work to equal the number of hours med students are putting in in 7. With the above assumption that those talented enough to get into med school would probably earn more than average bachelor’s degree only holders, potential salary losses swell to $674,400 through residency (even subtracting the average medical resident salary of $48,800). Coupled with average medical school debt of $170,000, the total cost of attending med school including lost opportunity is around $800,000.

What Medicine?

Above we’ve fleshed out a ballpark figure of losses compared to the general degree-holding population, as well as to what we believe those who go to medical school are capable of if they chose another path. We’re still speaking too generally, however, as we haven’t accounted for the range of education requirements and benefits of different medical specializations. For example, to be certified in internal medicine, a doctor needs to graduate from medical school, complete a 3-year internal medicine residency, and pass board exams. To become a thoracic surgeon, one must graduate from medical school, complete a 5-year general surgery residency, complete a 2-year thoracic surgery fellowship, and then pass thoracic surgery boards. A difference of 4 more years in school (7 years vs. 11 years).

This difference is reflected in the eventual salaries of our example specializations. Pediatricians make an average of $210,678 a year, while pediatric thoracic surgeons make a whopping $762,846 a year. Speaking only in terms of finances (not focusing on individual passions, importance of work environment, and so on), very few specialization choices for those in med school face a meaningful financial loss due to additional years in school. In an example without taxes, the 6 extra years in which a pediatrician is out of school and working, and a pediatric thoracic surgeon is in school will net the pediatrician about $750,000 (once residency pay is included). Every year that the pediatric thoracic surgeon is out of training, however, will chunk over $500,000 off of previous comparative losses.

Pediatric thoracic surgeons are a rather extreme example, however, as they are one of the highest paid and most specialized medical disciplines. Taking another discipline that requires a great deal of school yet is more common, the financial benefits of becoming a geriatrician are somewhat less clear. Assuming, again, that a potential medical school student would end up making greater than average salary outside of medical school ($30/hour) soon after graduation, a geriatrician has lost a potential $930,000 in earnings (if they had worked the same amount out of medical school) by the time they’re practicing doctors. Assuming the opportunity cost of a potential geriatrician continuing to make $30 an hour slows down the recouping of loss brought about by a geriatrician’s average salary of $188,885, rendering an effective salary of $126,485 (not including taxes) with which to catch up from the million dollar deficit. School debt adds to the deficit, but generally it should take over a decade to catch up to what a geriatrician would have potentially earned. Meaning on average that a geriatrician breaks even in their early to mid 40’s. Factoring in a 33% tax bracket, and average interest accrual on student loans, the break even point can be extended almost a decade farther.

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While the relatively high salaries of doctors invariably pay for opportunity and real costs of a long training period, the stresses of large debt loads, long hours of studying and residency, and sometimes extremely stressful work conditions take their toll. A recent report on American Medical News notes that nearly 90% of physicians feel moderately stressed, severely stressed, or burned out daily. For younger doctors in training, the burden of escalating debt and intense stress in training is often too much. Med students who realize they don’t really want to work as doctors have already taken on large loans, and often feel trapped. Unless you truly feel a calling for medicine, can cope well with the stress, or are highly motivated by the future pay off, medical school is often not worth it.

The $75,000 Question

Medical school is a great choice for many people, but it’s worth noting a prescient fact: as noted in several studies, making more than $75,000 does not significantly improve your day-to-day happiness. There is a steady increase in day-to-day happiness as salaries increase up to $75,000. But $75,000 functions as a threshold over which increased earnings do not alter happiness. Though the amount varies according to cost of living, salaries for most professional careers increase corresponding to higher costs of living.

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If one of your goals as a potential medical student is to make enough money for stability and day-to-day happiness, there are a number of careers with many fewer opportunity costs and stress. As a particularly lucrative example, software development jobs often only require a bachelor’s degree, and yield an average salary of $90,530. Let’s compare a pediatrician who spends 7 years obtaining training, takes out $170,000 in loans (on average), and earns $210,678 a year. Coming out of school at 29 or 30, the pediatrician is $803,710 behind the developer in terms of lost wages and debt. With a difference of $120,148 in salaries, it will take the pediatrician six and a half years to recoup losses. And that’s not figuring in the pediatrician’s higher tax bracket and interest on debt that accrues. There are certainly reasons to not want to be a software developer, or to want to be a pediatrician more than any other career, but these are financial considerations that should be weighed.

While most medical specializations have trumped opportunity costs by the late 30’s, this is assuming that you want to practice medicine, and continue to through the entire duration. Not missing out on potentially higher earnings through your 20’s and 30’s, and bypassing extreme time, energy and stress-level-raising commitments are positive notes for most. Is medical school worth it financially? It’s up to you.

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